Commission urges wine and grape leaders to work together

Thursday, July 8, 2010

by SUSAN MANN

Ontario grape and wine industry leaders’ failure to work together effectively is holding the sector back from meeting its full potential, the Farm Products Marketing Commission says.

That was one of the conclusions in the Commission’s report, Building Success for Tomorrow, released to industry stakeholders Monday. Grape and wine leaders say work has already started on many of the report’s seven recommendations to modernize the grape marketing system.

“We’re looking at a new pricing model,” says Bill George, Jr., chair of Grape Growers of Ontario. The industry is also starting to address quality and “rewarding quality grapes with a bit higher pricing and discounting some grape pricing in areas where it needs to be discounted.”

Hillary Dawson, president of the Wine Council of Ontario, says a lot of the recommendations call for collaboration, “which is always important in trying to work towards the goals of the industry.”

Anthony Bristow, chief operating officer of Andrew Peller Ltd. and chair of the Winery and Grower Alliance of Ontario, says the recommendations that will be useful are the ones that can bridge some of the trust gaps in the industry and “make economic sense for the stakeholders.

The report says that former agriculture minister Leona Dombrowsky asked the Commission in 2009 to look at grape marketing regulations under the Farm Products Marketing Act “to better align with government objectives and to modernize the system for marketing grapes.”

The goal was to allow more flexibility in the marketing system to encourage growth in demand with the focus mostly on processing grape quality and pricing.

“Grape volume and price negotiations have become an annual confrontation of stakeholders with little in the way of any sort of binding benefit,” states the report. The industry continues to have no discipline in managing supply yet operates with the expectation that the processing sector is responsible for buying all the grapes at the negotiated price.

“This expectation is a major driver in the vineyard expansion that has and will continue to generate ever-increasing surpluses unless a leadership position is taken and changes are implemented,” the report states.

The Commission praised the growers and wineries’ participation during the consultations. But it expressed disappointment with the quality of the discussions and the information exchanged during the meetings of the Grapes for Processing Industry Advisory Committee (GPIAC). “This outlined a concern about the level of trust, respect and cooperation at the industry leadership level.”

Among the Commission’s recommendations are:

•    GPIAC lead the development of a standard contract between growers and wineries;
•    Grape Growers of Ontario implement a two-level license fee structure to recognize that wineries growing their own grapes don’t benefit from Grape Growers negotiating and marketing efforts but do benefit from other activities;
•    the industry negotiates alternatives to the sugar schedule to better reward high quality at one end of the scale while allowing grapes to be competitively priced at the other end;
•    the industry develops a clearing mechanism to sell grape surpluses;
•    the industry implements a limited pilot project allowing a small number of growers and wineries to directly negotiate the prices for grapes.

The Commission recommended that the negotiation process for juice grapes remain unchanged for now. It will also update the GPIAC and negotiating agency membership list to recognize the Winery and Grower Alliance of Ontario.

Industry representatives say Ontario Agriculture Minister Carol Mitchell told them the limited pilot project on direct negotiations won’t be pursued at this time. BF